1. Market Research
  2. > Food Market Trends
  3. > Kenya Business Forecast Report Q3 2014

Kenya Business Forecast Report Q3 2014

  • April 2014
  • -
  • Business Monitor International
  • -
  • 38 pages

Core Views

A wave of small-scale terrorist attacks shows that the Kenyan security services are unable to prevent Somali-based al-Shabaab from operating in Mombasa. Another large-scale attack, especially in Nairobi, would have a devastating effect on investor confidence. Over the longer term, sharp ethnic divisions pose a serious threat to political stability in Kenya. Political parties are mostly organised along ethnic lines, and it remains possible that future elections could lead to a crisis such as the one seen in 2007-2008.
Economic growth in Kenya is still accelerating, but rising headwinds have caused us to lower our 2014 real GDP growth forecast from 6.0% to 5.7%. Economic expansion will average 6.0% between 2014 and 2018, faster than in recent years but slower than in many African countries.
Inflation has remained constrained in the first half of 2014, but we expect it to pick up in the second half of the year due to rising food prices. Price growth will likely remain relatively moderate, but a worse-than-expected harvest could cause inflation to spike. Questions regarding the accuracy of Kenyan official data have led us to revise our 2014 current account deficit forecast from 8.7% of GDP to 7.6%. Lower oil prices and strong export growth will see the shortfall shrink, though a poor harvest could boost imports and prevent this.

Faster economic growth and lower capital spending will cause Kenya's fiscal deficit to narrow over the coming years. We predict that the country's budget shortfall will be equivalent to 7.5% of GDP in 2013/14. Kenya's GDP will double in US dollar terms between 2014 and 2023 as growth accelerates and the currency remains relatively stable.
The country will benefit greatly from its role as the economic and commercial hub of the fast-growing East African Community.

Major Forecast Changes

We have downwardly revised our real GDP growth forecasts due to poor figures from Q3 2013, the last period for which official data is available.

Table Of Contents

Kenya Business Forecast Report Q3 2014
Executive Summary 5
Core Views 5
Major Forecast Changes 5
Key Risks To Outlook 5
Chapter 1: Political Outlook 7
SWOT Analysis 7
BMI Political Risk Ratings 7
Domestic Politics 8
Security Situation Will Remain Tense 8
Kenya's anti-terrorism efforts remain weak and poorly coordinated, and we doubt that the country's security services would be capable
of preventing another spectacular attack by al-Shabaab, which would have significant negative implications for tourism and foreign
investment. A draconian crackdown also risks further alienating the country's Muslim population.
table: Political Overview 8
Long-Term Political Outlook 10
Ethnic Polarisation Remains Key Challenge 10
Despite the terrorist attack on the Westgate shopping centre, the politicisation of sharp ethnic divisions remains the key threat to
Kenya's long-term political stability. Although the 2013 elections were peaceful, voting patterns show that the electorate continues to
cast ballots according to ethnicity. Meanwhile, President Uhuru Kenyatta, elected in 2013, is facing charges at the International Criminal
Court. This will complicate the country's relations with the West. Terrorism linked to Kenya's military involvement in Somalia is likely to
remain a risk, but it does not pose a systemic threat to political stability.
Chapter 2: Economic Outlook 13
SWOT Analysis 13
BMI Economic Risk Ratings 13
Economic Activity 14
Accelerating Growth Faces Significant Headwinds 14
Real GDP growth is accelerating in Kenya, but the speed of the country's economic recovery is slowing due to weaker consumption
growth and a persistent trade deficit. We have downgraded our 2013 economic growth estimate from 5.4% to 5.2% and our 2014
forecast from 6.0% to 5.7%, but stress that even this slower rate of growth is a significant improvement compared to the performance
seen in recent years.
Monetary Policy 17
Inflation To Pick Up In H214 17
March 2014 consumer price inflation figures show that price growth in Kenya is slowing, in line with our view that inflation will remain
constrained in the first half of the year. We maintain the view, however, that higher food prices will pull inflation higher in H2 2014.
Balance Of Payments 19
Data Revisions, Lower Oil Imports Drive Narrower Current Account Deficit 19
Concerns over the accuracy of Kenyan official data have led us to revise our 2012 and 2013 balance of payments figures, narrowing the
current account deficit in both years. These changes do not affect our core view, which is that lower oil import bill will reduce Kenya's
trade deficit over the coming years, leading to a smaller current account shortfall.
Fiscal Policy 21
Accelerating Economy, Lower Capital Spending To Trim Deficit 21
Kenya's fiscal deficit will narrow over the coming years, from 7.5% of GDP in 2013/14 to 7.0% in 2018/19. This forecast assumes that
economic growth accelerates and that the president succeeds in restraining wage costs; risks are weighted towards a slower fiscal
Chapter 3: 10-Year Forecast 25
The Kenyan Economy To 2023 25
Solid Foundations Spur Broad-Based Economic Growth 25
We expect that Kenya's economy will more than double in US dollar terms between 2014 and 2023, with annual real GDP growth
averaging 6.0%. The economy is highly diversified, and serves as the commercial core of the fast-growing East African Community.
table: Long-Term Macroeconomic Forecasts 25
Chapter 4: Business Environment 29
SWOT Analysis 29
BMI Business Environment Risk Ratings 29
Business Environment Outlook 30
Institutions 30
Infrastructure 33
Market Orientation 34
Operational Risk 36
Chapter 5: BMI Global Assumptions 37
Global Outlook 37
Chinese Economy Under Pressure 37
Table: Global Assumptions 37
Table : Developed States , Real GDP Gro wtH, % 38
Table : Emerging Mar kets , Real GDP Gro wth , % 39

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Veronica

+1 718 514 2762

Purchase Reports From Reputable Market Research Publishers
Food Preparation 2016; Market, Retailers and Consumers

Food Preparation 2016; Market, Retailers and Consumers

  • $ 8600
  • Industry report
  • August 2016
  • by Verdict Retail

Summary Food preparation expenditure is expected to rise 1.8% in 2016. Growth in 2015 and 2016 has been predominantly volume driven, with the category benefitting from the cooking at home, healthy eating ...

Baby Food in China, Canadean Ltd

Baby Food in China, Canadean Ltd

  • $ 8325
  • Industry report
  • June 2016
  • by Canadean Ltd

Summary The Chinese baby food market has developed strongly over the historic period, although the last two years have seen a fall in growth rates as the overall economy has slowed down. All sectors of ...

Global Food Additives Market - Segmented by Type (Preservatives, Sweeteners, Hydrocolloids, Colorants, others), Application (Dairy & Frozen, bakery, Meat products, Beverages, Confectionary, others) & Geography

Global Food Additives Market - Segmented by Type (Preservatives, Sweeteners, Hydrocolloids, Colorants, others), Application (Dairy & Frozen, bakery, Meat products, Beverages, Confectionary, others) & Geography

  • $ 7500
  • Industry report
  • August 2016
  • by Mordor Intelligence LLP

The global population is growing at a rate of 1.14% and the increasing calorie intake per capita is leading to substantial increase in the global food production. Growing urbanization and changing lifestyles ...

Download Unlimited Documents from Trusted Public Sources

Fish And Seafood Industry in the US

  • October 2016
    73 pages
  • Fish Farming  



  • United States  

View report >

Global Fish And Seafood Industry

  • October 2016
    33 pages
  • Fish  


    Fish Farming  

  • United States  


View report >

Avocado Supply in Colombia and the US

  • October 2016
    21 pages
  • Avocado  

  • Colombia  

    United States  

View report >

Milk Supply In The Us

18 hours ago


Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.